Tax cuts, and whether they will expire at the end of 2010, have been discussed for months. Sadly, almost every article/column/blog post I’ve read has been wrong on simple facts.
The facts are really simple. Proposals advanced by President Obama and the Democrats in Congress leave the so-called Bush tax cuts in place with respect to the first $250,000 of taxable income earned by families. Thus, the Bush tax cuts will remain in place for all taxpayers who pay federal income tax, as to the first $250,000 of taxable income.
The 2% figure you hear about represents the percentage of Americans with taxable incomes that exceed $250,000. As for them, they get the lower tax rates on the first $250,000 of taxable income. The balance of their taxable income will be taxed at the rate in effect when Bill Clinton was the President, back when our government spent less money than it collected (and was using the excess to reduce the national debt.)
As for the $250,000, that represents taxable income. That sum represents total earnings before deductions and exemptions. Many people with taxable income of $250,000 have gross income of more than $300,000.
So when you hear a story that claims tax cuts will only be available for 98% of all Americans, that’s a false story. When someone claims tax cuts will only people making less than $250,000, that’s false too.
This is not terribly complicated stuff! Unfortunately, those people who report on public policy debates–and some of the debate participants, because they are lazy thinkers or dishonest advocates–are often wrong on the facts!!!